Flipkart leads e-tailers to counter offline retailers

After the brick-and-mortar retailers got together, it’s the turn of e-commerce entrepreneurs to join forces. Sachin Bansal, Flipkart’s chairman is trying to bring together e-commerce companies to create a lobby group that can counter brick-and-mortar retailers such as Aditya Birla Group and the Future Group, who are believed to influence government policies through organisations like Retailers Association of India (RAI).

Bansal, along with other heads of e-commerce sites, met minister of state for finance, Jayant Sinha to apprise him of the concerns of the online sector. In fact, he took the initiative to send personal invites to his counterparts in other commerce platform for a meeting with Sinha. Interestingly, Amazon was not invited.

Things are getting difficult for online retailers. And the pinch can be felt more so after the government mandated that foreign-funded ventures can operate only as a marketplace (they cannot themselves deal in goods, and can only allow third-party sellers to be on their platform), that the platforms cannot use their funds to offer discounts, and that total sales originating from one seller cannot exceed 25 per cent of total sales on the platform. This mandate was interpreted by many as favouring the brick-and-mortar stores. E-commerce players, many of whom have been funded by foreign parent companies or foreign venture capital, had been using their funds to discount products and some had helped create large third-party vendors who could more efficiently deal with products.